ENTERPRISE WIDE FINANCIAL CRIME MANAGEMENT BECOMES MAINSTREAM

Leading financial service providers are embracing an enterprise wide risk based approach to financial crime management, says Datamonitor & Norkom

• More than half of all major global financial service providers have consolidated AML and fraud prevention across the enterprise
• Almost half have centralized management structures by establishing Financial Intelligence Units
• Risk-based approach and customer due diligence are the new priorities

10 January 2007, Boston, MA: New research, carried out by Datamonitor on behalf of Norkom Technologies, confirms that a radical change has taken place in the way financial services providers manage regulatory compliance and financial crime. Our respondents – senior decision makers in global financial services institutions – are combining their management of both activities on an enterprise wide basis. This change was predicted by the same research programme one year ago, though, at that stage, only an enlightened minority had begun the consolidation process. Today’s research makes it clear that enterprise wide management is now a firmly established business approach.

Almost three quarters (73%) of respondents - leaders in global tier one institutions - confirm that they are managing anti-money laundering (AML) in tandem with other types of financial crime. More than half (53%) have achieved this on an enterprise wide basis, embracing all geographies and business lines. 20% are progressing towards this goal, having achieved it in some territories.

47% of respondents say they have established Financial Intelligence Units in order to overcome the organisational barriers traditionally associated with enterprise wise management and to centrally manage investigative resources. A further 14% plan to do so within the next 12 to 24 months.

“As we predicted, enterprise wide financial crime management is now a reality in most major financial institutions, with those organisations seeing significant improvements in detection rates and cost reductions as a result.” says Norkom’s CEO, Paul Kerley.

“Organizations are now focusing their attention on successfully adopting a risk based approach – not just for AML as the regulator requires – but for all areas of financial crime. And they expect these two new priorities to deliver even greater business benefits.”

87% of institutions report that they have experienced or expect to experience improvements in crime detection capability as a result of their enterprise wide approach; 80% say they’ve experienced or expect cost savings. But 93% agree that the business benefits of a risk based approach to customer due diligence and ongoing monitoring will be even greater.

“A risk based approach – in which the extent of monitoring attention given to an individual account or customer is directly commensurate with the degree of business risk they pose – is now a regulatory requirement within AML,” explains Kerley. “But far sighted organizations have recognised the potential for commercial benefit, too, and will extend this approach to all areas of financial crime. Costs will reduce as detection accuracy and investigative efficiency improves. Customer responsiveness will also rise, since low risk new business will be able to be brought onto book more quickly.”

To obtain your copy of the research report: ‘Securing the Future Against Financial Crime: Enterprise wide management and beyond’ email .(JavaScript must be enabled to view this email address).